What Is an Eco-Enterprise? Why is it so successful?

Many companies are embracing Sustainable practices for a litany of reasons, including improved profitability, social justice, environmental stewardship, operational efficiency, positioning in the marketplace, investor relations, regulatory requirements, just to name a few.

What is an Eco-Enterprise?

There are no minimum criteria which differentiate a company from being defined as an Eco-Enterprise. Every company has a carbon footprint, uses resources, energy, materials, etc. An Eco-Enterprise is defined as a company that has taken steps to: 1) adopt more environmentally sound practices, 2) create more environmentally sound products, 3) foster a closer relationship with the planet, to reduce its impact on the Earth. The first step in setting goals is to benchmark the current status. To make progress, the goals must be accurately measured and consistently tracked and reported. There are many resources available from third party organizations. These groups can be governing bodies, Non-Governmental Organizations (NGO’s), Non-Profits, or For-Profit entities.

The United Nations has set up guidelines that encompass not only environmental stewardship, but also other facets of Sustainability. The UN Global Compact has principles that also address human rights, labor, and anti-corruption aspects. Ceres is a non-profit organization that leads a national coalition of investors, environmental organizations, and other public interest groups working with companies to address sustainability challenges such as global climate change and water scarcity. Their mission is iintegrating sustainability into day-to-day business practices for the health of the planet and its people. They are facilitating the transition by creating their well respected guidelines:The 21st Century Corporation – Ceres Roadmap for Sustainability.

The Global Reporting Initiative (GRI) is a network-based organization that produces a comprehensive sustainability reporting framework that is widely used around the world. They foster accurate and consistent reporting and transparency for enterprises. They are committed to the Framework’s continuous improvement and application worldwide. GRI’s core goals include the main streaming of disclosure on environmental, social and governance performance. GRI’s Reporting Frameworkis developed through a consensus-seeking process. In fact, ten global companies have stepped up as sponsors of the next generation of Sustainability Reporting Guidelines, which was announced by GRI this past June. Among them, Alcoa, Enel, GE, Goldman Sachs, Natura and Shell are supporting GRI during the two year development of the Guidelines, which will also be supported in development by top consulting firms Deloitte, Ernst & Young, KPMG and PwC.

There is one key facet of an Eco-Enterprise worth mentioning, and that is the championing of these efforts by the Executives or Board of Directors. Only through the commitment of their leaders can an enterprise successfully establish a culture of Eco-Awareness and incorporate it into the DNA of that enterprise.

Documented Performance and Continuous Improvement.

There is widespread agreement that once the Benchmarking phase has taken place, collection and accuracy of data is paramount. This data will be aggregated and used for setting goals, forecasting results, documenting performance, and tracking results. Once measurable goals have been attained, striving for continuous improvement should become part of the DNA of an Eco-Enterprise.

Building the Enterprise around a Mission of Sustainability.

More and more, marketplace niches are being exploited, allowing companies to tie this core mission into their entire corporate culture. Organic farms and products strike a chord with consumers, as they are viewed as healthier and having less of an impact on the planet. Stonyfield Farms is a well-known organic farm that has built their company and brand around these core principles, once again proving that profitability does not have to be sacrificed for Sustainability. In the very competitive and low margin marketplace of supermarkets, Whole Foods has emerged as a leader, developing their core mission around the tenets of Sustainability. They have bucked the trend of selling on price, and have built value around quality, health and safety, fair trade practices, and supporting products and companies that align with their mission. These examples can be found in many industries, and have proven time and time again that environmental stewardship can successfully align with maximizing profits and market share growth.

Leveraging Green Initiatives for Product Line Extensions

Front runners of the industry have successfully adopted the Eco-Enterprise model to drive significant growth in parts or all of their enterprise. GE took an aggressive approach and has successfully branded their efforts as Ecomagination. Eco-Options was launched by Home Depot to capture an under-appreciated part of the home improvement marketplace. They have highlighted products that offer energy savings, are healthier, more earth-friendly, use recycled/recyclable materials. IBM has built an entire multi-billion dollar practice around their Smarter Planet Initiative, which focuses in large part on Sustainability initiatives.

Summary:

Although companies may have different incentives to become an Eco-Enterprise, all companies must agree on one keystone concept: the need to consider the Planet and its limited resources at every juncture in the decision-making process. That consideration does not come at the expense of profits, but actually aligns well with the increased profit goals of the enterprise. Whether it is through cost-saving measures or revenue generating initiatives, profitability is always paramount. There are many third-party resources available to help companies progress towards their sustainability goals. Benchmarking is the first step, as data collection and integrity is an absolutely critical pre-requisite. Secondly, Eco-Enterprises must commit to continuous improvement. Performance will need to be forecasted, documented and reported, while the underlying data must be reliable and available. This movement is not a fad; instead this movement is becoming an integral part of 21st century business. Whether by regulatory requirement, moral imperative, customer demand, supply chain consistency, or operational efficiency, companies will need to evolve into an Eco-Enterprise to thrive in this new Green era.